Airbags Inflating Repair Costs, Total Losses

Vehicle restraint systems save lives; no one is going to argue that, Doug Gann says. But the influx of these systems—including various multi-point airbag features—are hurting the collision repair industry.

“At least in the way they are often being approached during the repair process,” offers Gann, chief operating officer for Airbag Solutions, an information provider focused exclusively on restraint systems. “Too often they are resulting in supplements that are leading to total losses.

“There is no question that the airbag additions and safety requirements that many of these car companies are putting forth are increasing the turnover of vehicles. It’s a
simple fact.”

Severity for auto insurance claims on repairable vehicles has risen steadily in each of the past four years. According to data from Mitchell International, severity has gone from $2,596.36 in the fourth quarter of 2010 to $2,758.74 in Q4 2013. While not a large discrepancy, the trending rise is unique to collision repair alone, says Greg Horn, vice president of industry relations for information service provider Mitchell International. ATV and comprehensive insurance has not seen regular rises.

Horn says the trend for collision severity has been brought on largely due to new, more sophisticated components in vehicles—restraint systems being a large one. The proliferation of advanced and additional airbag components, he says, are a huge factor in this equation.

Simply put, the increase in airbag systems has led to an increase of improper repairs, supplements and total losses across the industry, issues brought on by a lack of knowledge and processes of estimating and repair. And it will only continue to trend negatively if shops don’t take the proper steps to counter it.

“These are issues that are not only affecting collision businesses’ bottom lines, but also customer satisfaction and trust,” Horn says. “This is a real problem, and the industry needs to adjust.”

By the Numbers

Side airbags were introduced in vehicles in 2002 and have become more and more frequent each year. According to data from the Insurance Institute for Highway Safety, more than 48 percent of model year 2014 vehicles have them.

The average model year on the road today is a 2006, Horn says, and as that average continues to trend later, the more vehicles there will be with side airbag components.

Add in that one-fourth of all accidents occur on the driver-passenger end of the vehicle, and Horn says there are some clear conclusions about severity increases.

“When one-fourth of all cars are being hit in an area where a new, expensive component can deploy, it makes a lot of sense,” Horn says. “And what it’s doing, in the end, is raising the total loss rate.”

Bad Info, No Info and Misuse

The problem for many shops begins with sparse knowledge of the components and the proper procedures for repairing them, Gann says.

“Take a simple vehicle like a Dodge Dart,” he explains. “There are 10 airbags and four seat belt pretensioners, and you’re probably talking $500 for each airbag to replace them. I mean, a small accident could result in a $4,000 to $5,000 ticket before you even get to the actual crash damage; that’s just the restraint system.”

Many automakers require components to be completely replaced even if they appear to be undamaged in the accident, Gann says. A deployment on a Hyundai, for instance, requires the wiring harness to be replaced; every seat belt must be replaced in a GM if there was an occupant in that seat; Ford has a collapsible steering column that needs to be replaced.

“These are things that without doing the right research, you’re going to miss,” Gann says, “and they’re going to lead to very large supplements and, often, a vehicle being totaled out late in the repair process. Those things are going to hurt your relationship with insurers, with customers, and hurt your bottom line.”

And Gann says there are many businesses that will simply ignore the requirements, putting unsafe vehicles back on the road.

Preparation is the Solution

Consumer satisfaction drops by more than 5 percent with a total loss compared to a repair, according to a J.D. Power & Associates study. Now, imagine how much those levels drop when that total occurs late in the repair process, Horn says.

In order for shops to eliminate missteps and mistakes when dealing with restraint systems, they need to be equipped with the right information. Gann suggests a simple process: Research the vehicle’s systems and repair/replace requirements before it comes in; do a visual inspection on arrival; complete a thorough scan of components; and tear down as needed.

“It starts with knowing what you’re looking for,” Gann says. “If you don’t fully understand that system, you’re at a huge disadvantage. Then, just like you’d check for damage behind a bumper, you need to thoroughly check these systems to avoid those costly supplements that can lead to a total.”

Bryce Evans is the vice president of content at 10 Missions Media, overseeing an award-winning team that produces FenderBender, Ratchet+Wrench and FIXED.